Redistribute the Wealth? Preposterous! The people can’t Handle the Wealth. We just need them to Buy Buy Buy
My initial thoughts were cycling around the question of ‘what’ it is that a 2nd stimulus package is intended to achieve. Everyone (Ben Bernanke, the President, the ‘markets’, etc..) seems to think one is absolutely needed to ‘jump start’ the economy..to get it ‘back on track’…to get people ‘spending’ again. However, this obvious necessity (expressed by so many ‘experts’) seems all too surreal in light of the the apparent facts that the economy is currently in such dire straits because ‘the people’ were encouraged spend so much beyond their ability to pay that it triggered a cascade of distrust in the financial system.
I feel somewhat like the child asking why the emperor is parading around naked when everyone else is loudly praising his clothing. But, back to the stimulus package, why is there such a push to get ourselves back on a track that has already proven itself to be heading in the wrong direction? I’ll grant there are a lot of reasons to help the newly unemployed – but it is jobs they need. I’ll grant that there are a lot of reasons to help the un-insured – but it is insurance they need. However, that is not what I hear when listening to those calling for another round of stimulus. Instead
Bernanke stated principles that would be help in creating a second economic stimulus package:
- “…any fiscal package should be structured so that its peak effects
on aggregate spending and economic activity are felt when they are most
needed, namely, during the period in which economic activity would
otherwise be expected to be weak”
- “Any fiscal package should be well-targeted, in the sense of
attempting to maximize the beneficial effects on spending and activity
per dollar of increased federal expenditure or lost revenue”
- “Congress must be vigilant in ensuring that any allocated funds are
used effectively and responsibly. Any program should be designed, to
the extent possible, to limit longer-term effects on the federal
government’s structural budget deficit.”
- “…including measures to help improve access to credit by consumers, home-buyers, businesses, and other borrowers.”
Basically, a new package should help increase consumer spending when it would otherwise be low; it should provide the most bang for the buck for taxes spent on the stimulus; the money should be spent responsibly and not blow up the federal deficit; and it should help people get credit who need it.
The last paragraph best summarizes what I’ve been hearing – that it is consumer spending that is all important and the faster that gets moving again (presumably at the same pace, or faster than, it was prior to the financial melt-down) the better off everyone will be. My response to this is: Oh Really?! Who benefited the most from the (earlier) status quo? It certainly wasn’t the average ‘Joe’, so why should the average ‘Joe’ jump back on the same treadmill and buy, buy, buy? This is the perfect time, when everything is broken (or in the process of breaking) to change paradigms (or at the very least build a different treadmill)
Now – to the title of this piece. Presumably a ‘stimulus package’ is not equivalent to ‘re-distributing the wealth’ (a phrase we’ve all heard ad nauseum for the last few weeks) and is therefore A-OK in the minds of the current administration (and administration wanna-be’s) since it is viewed as a one time (2nd time?) payout and which will be tacked on to the burgeoning debt burden in any case.
If you think that letting people default on mortgages, or extending them, or debt forgiveness is going to help the economy, it’s not. It’s just a pacifier and a very short term solution. You forgive a mortgage, who is to say that individual wont simply turn around and sell the house. Even if they do keep the house, with no job they can’t pay taxes at a state or federal level (the next big thing I think will happen after the credit crunch or credit bubble.)
Just more catchy phrases being thrown at us like Axis of Evil, Pro-Choice, Insurgent, Pro-Gun whatever. Promises that will not be kept on any real change on any large scale effective level.
And what is fair? What about the people who PAID the mortgages on time. Would they not like a refinance if needed, or debt forgiveness, or financial aid? So we should reward the defaulters and punish honest people who paid on time with more taxes. Seems to me the government is trying to bundle these Two groups together with different methods.
Congress is the watchdog? They created the problem in the first place! If Congress is the watchdog, how come they are not barking loudly about all the bonus packages being paid RIGHT NOW to the bankers with bailout money?
One of the oldest tactics in controlling people is to take 10 times, and give back once. Just enough to keep your mouth shut. Justice, fairness, freedom and accountability are words we should be ashamed to use, because it does not exist anymore.
If 1 thin DIME went out as bonuses, which it did, times billions, or to crooked bankers as bonuses for people who orchestrated this from taxpayer dollars, and the American people sit back and let this happen, then I feel very sorry for all of us.
You actually think Obama or McCain are going to change things? That’s what is most laughable. Want to change things? Restructure the entire government, kick the lobbyists out, make it a federal crime punishable by death for influencing or being influenced by any financial gain or favor that results in major suffering of any American citizens, the deliberate destruction of American business or anything that greatly has an effect on growth in this country, like allowing millions of jobs to go overseas, or allowing Thousands of jobs to be performed by foreign workers in America. If you want to do business here, employ here, not in China. They can’t even make baby formula, milk or children’s toys correctly.
These political people are a majority of idiot cowards, and they are the worst kind of human. The spew lies to your face, and behind your back get as rich or powerful as possible, with no regard for you or your family or community.
Consumer spending is not the answer. Consumer’s spending less, much less, will show the power of the American people. Yes I know businesses will suffer, but most of those businesses are selling imported goods so I don’t care.
I don’t have all the answers for this, and I think it is happening so fast they want to confuse us and move so we can’t catch on as quickly. Once the money is spent, it’s spent.
I do know this. We have the power to control all of this. Cut back on gas, the price drops. Cut back on spending, the prices drop. Use less, life gets cheaper. The only problem we are facing that we cannot control is the massive tidal wave of new taxes coming our way. Nothing can control that.
Nobody is talking about jobs in America. We are about to have a major shakeup of the auto manufacturers in America. More unemployment and more defaults on everything credit related.
As for the bankers, enjoy your vacations and fun with all our hard earned money.
In 1914, Henry Ford convinced the directors of Ford Motor Company to
increase the minimum wage it paid most workers to $5 a day. In return,
Ford, the first company to use the assembly line to produce
automobiles, got greater commitment from its employees to help
management achieve the potential efficiencies possible with assembly
production. In addition, the company gained so much free publicity that
it was able to virtually eliminate its advertising budget for years
after the announcement. But Henry Ford argued years later that the
biggest benefit to the company was the enrichment of its workforce,
“For on that day we first created a lot of customers.”
For a time, Ford’s action put upward pressure on wages not only
among automobile manufacturers but in other industries as well. In less
that a decade, however, Ford’s leadership in profit sharing was almost
totally ignored by most U.S. businesses. The 1920s were a period of
remarkable growth in industrial output. Between 1920 and 1929 worker
productivity grew by 63 percent while real wages (after accounting for
inflation) fell by 9 percent. The benefits of this productivity boom
accrued entirely to business. Part of it was distributed to stock
holders in the form of dividends, helping to push share prices ever
higher, while the remainder was invested in new plant and equipment,
which further increasing productivity and industrial output.
That cycle continued until October of 1929, when Wall Street
suddenly realized that consumers could not begin to purchase all of the
goods and products that this capacity was capable of producing. The
late Arthur Schlesinger wrote in The Crisis of the Old Order:
Management’s disposition to maintain
prices and inflate profits while holding down wages and raw material
prices meant that workers and farmers were denied the benefits of
increases in their own productivity. The consequence was the relative
decline of mass purchasing power. As goods flowed out of the expanding
capital plant in ever greater quantities, there was proportionately
less and less cash in the hands of buyers to carry goods off the
market. The pattern of income distribution, in short, was incapable of
long maintaining prosperity.
Full report available at: http://www.americanprogress.org/issues/2008/08/bushonomics.html
This is not about helping people, it’s about helping the retail industry. Has anybody given any thought as to the timing of this colossal BS? Hummm, a month and a half before the holiday buying season – the time of the year when the vast majority of all retail business gauges its ability to stay in business for another year or not!
This is meant to encourage more spending, to encourage more borrowing, to encourage people to use credit beyond the money that is being sent to them as the government’s latest "gift" to the masses. If you have been paying attention to anything on this site, you would know that these are not mystery economic anomalies, but well orchestrated collapses intended to create large-scale defaults allowing a select few to capitalize on the crisis.
Uh, oh – there I go again; conspiracy theory thing again!
Also, we can expect the oil to rise hard again right when the Winter months hit the North. Like clockwork this will happen right on time to put the screws to the poor and middle class.